The Soccer Stadium Should Pay Taxes

Soccer ball on money A belated congratulations to our local soccer team for gaining admission into Major League Soccer. The Minnesota United FC are one of twelve professional sports teams based in the Twin Cities:

  • Minnesota Twins
  • Minnesota Vikings
  • Minnesota Timberwolves
  • Minnesota Wild
  • St. Paul Saints
  • Minnesota Lynx
  • Minnesota Vixen
  • Minnesota Swarm*
  • Minnesota Machine
  • Minnesota United FC**
  • Minnesota Lady Slippers
  • Minnesota Wind Chill

* The Swarm recently announced that they’re moving to Atlanta ** The Minnesota United FC will switch leagues, from the NASL to the MLS, in 2018. The Twin Cities are one of twelve metro areas in the country with a team in each of the four major professional sports leagues (MLB, NFL, NHL, and NBA). Besides Denver, we are the smallest metro in this elite set. In addition to our professional teams, we have roller derby, the NCAA Division I Golden Gophers, and lower-level college and high school sports. When it comes to the variety and quantity of sporting events, the Twin Cities really knock the cover off the ball by shooting under par and punching above their weight. No fan can complain about a shortage of sporting events. But some professional teams are complaining about a shortage of stadium subsidies:

Minneapolis might say to us, ‘We don’t want you here.’ And then we’ll have to assess our options and figure out where is there a community that wants us. That’s important. It’s important that the community wants us to be there.

— Nick Rogers, president of the Minnesota United FC.

My attitude is the same as Council Member Andrew Johnson’s: I’m in favor of a new soccer stadium, as long as it’s completely privately financed. The confusion arises from Mr. Rogers’ implied assumption that if Minneapolis must give tax breaks to the stadium to show that the city wants it. This assumption is wrong. It’s impossible for a city to give tax breaks to every establishment that belongs in the community.

If you look around the city, you’ll see that many establishments necessary for everyday urban life also pay property taxes. Grocery stores irrigate our food deserts, and provide the literal sustenance for our lives. And yet, the Uptown Cub Foods pays $158,000 a year in property taxes. Coffee shops facilitate knowledge spillover and cross-pollination of ideas (as they have since the Renaissance), and caffeine rejuvenates our workforce. And yet, the Spyhouse in Northeast pays $95,000 a year in property taxes.

Live music is what brought me up to the Cities when I was a teenager in a small farming town in southern Minnesota. We have the best music scene for thousands of miles, and I can’t imagine Minnesota boosterism without The Replacements, Prince, Doomtree, or some other artist. Still, music venues are businesses, and they chip in their fair share to make the city run smoothly: First Avenue pays $139,000 per year in property taxes. Why should the owners of First Avenue pay $139,000 per year on a property assessed at $3 million, and the very rich owners of Minnesota United pay a similar amount on property worth 50 times as much?

How is that fair or smart? I’ve heard people say, “Can we at least acknowledge that having a soccer stadium downtown would be nice?” Sure! And it’s nice to have grocery stores, music venues, and cafes, but these businesses should still pay taxes. Can we acknowledge that we don’t have to give multi-million dollar tax breaks to things just because we like them? We have to tax things we like. If we don’t, we’ll be in the sticky situation of balancing the budget on the taxes levied solely on pedal pubs and vape shops.

A lot of research shows that stadium subsidies are bad investments. As writer Nate Hood says, downtowns are good for stadiums, but stadiums aren’t necessarily good for downtowns. This can seem counter-intuitive, because we see stadiums go up, and then we see people shopping, and we think, “Of course, stadiums spur economic growth.” But economists have been studying the effects of stadiums and found their economic effects to be negligible.

Victor Matheson, an economist at the College of the Holy Cross, studied stadiums across the country to see if sales rose after the projects were built, or if they declined when the games stopped for strikes or lockouts. “There was simply not any bump at all,” Matheson said. Economist Dennis Coates says, “[Subsidized stadiums] don’t make any money. They just generate new spending in one location by taking it from another.” Then there’s the crooked appearance of the deal.

Bill McGuire is a friend of Council Member Lisa Goodman’s, and donated money to help her win an uncontested city council race. Mr. McGuire was the CEO of UnitedHealthGroup (until he retired with close to a billion dollars in stock options amidst an investigation by federal prosecutors and the IRS) when Council Member Linea Palmisano worked there. So we have a group of very rich people (including Bob Pohlad and Wendy Carlson Nelson) requesting $3 or $4 million dollars per year in tax breaks from city council.

Neil deMause at the stadium finance blog Field of Schemes has the right questions: “If a new stadium doesn’t make money, why should anyone build one? and Why are you spending $100 million on an MLS franchise anyway if it’s such a terrible deal?

The City of Minneapolis, Hennepin County, and the State of Minnesota are investing heavily in the area. The Cedar Lake Trail is a popular bike path that will soon have a $2 billion dollar light rail extension running next to it. Development will happen — it’s only a question of what and how soon. Transit-oriented development is a good thing because it grows the tax base. When you exempt desirable transit-accessible land from paying property taxes, you’re pretty much defeating the purpose of building a train in the first place. The exemption only makes sense you think that no one would like to build — and pay property taxes on — something near a train station, a baseball field, and a farmer’s market in downtown Minneapolis. And if you believe that, I’ve got a stadium to sell you.

Scott Shaffer

About Scott Shaffer

Scott Shaffer works for a nonprofit community development corporation in Minneapolis. He has a master's degree in urban and regional planning from the University of Minnesota. He and his wife live in the Powderhorn Park neighborhood with their daughter and two Siamese cats.